Think Outside the Box Store: 5 Retail Market Disruptions that Can Win Consumer Loyalty

Building a digitally enhanced, omni-channel customer experience amid today’s rapidly evolving technologies is like trying to change a tire on a car as it speeds down the road. The deluge of data available from online interactions and increased mobile technology adoption by consumers demands that in-store retail must become dramatically nimble and integrated with its digital counterpart. As a graduate student in Integrated Marketing Communications at Northwestern University, my research has been driven by an interest in mass market retail. I am always on the lookout for ways that retailers can sculpt the in-store customer experience and drive loyalty using analytics and new technologies.

Disruption: The Internet of Things

In Leveraging The Internet Of Things And Supply Chain Intelligence To Drive Superior Customer Experiences, Simon Walker reveals that many retailers are employing a growing network of physical objects called the Internet of Things (IoT). These objects contain embedded technology that allows them to communicate with each other to

Some predict that the Internet of Things will ignite a fourth industrial revolution, becoming a $200 billion global industry by 2020. 

decipher the relationship between people and other people, people and objects, and objects with each other. Only 10 billion out of the 1.5 trillion things that could be connected to the Internet are currently connected. By 2020, 50 billion Internet-connected items will result in $19 trillion in profits and cost savings. Expect this massive convergence of machines, data and analytics to become a $200 billion global industry. (Source: CMO.com)

Retailer’s Advantage

Inventory becomes seamless. IoT technologies track in-store items so that when something is sold, an RFID chip sends a request to replenish it on the store shelves. Item sales can be tracked in real-time to give buyers a more accurate picture of what is selling well and what is not. The chips also give salespeople and customers insight into availability of similar items in other locations.

Disruption: Wearable Devices 

Connected to the IoT will be wearable devices. More than ⅔ of all consumers plan to buy connected technology for their homes by 2019, and nearly half say the same for wearable technology. (Source: CMO.com) Walker explains that wearable devices are forecasted to become so significant that each person’s smartphone will become a hub for their own Personal Area Network (PAN) consisting of wearable gadgets such as health sensors, smart watches & jewelry and sensors embedded in apparel. Wearable devices will communicate with apps on the smartphone in the PAN, as well as other in-store sensors, to provide details on the consumer so intricate that retailers may be able to predict what consumers want to buy without before they even know they need it.

Retailer’s Advantage

Retailers can use information from wearable devices to gain a complete view of the customer journey. Technology in a consumer’s alarm could connect with the coffee maker to start brewing coffee before he awakes, and if the coffee supply is low, technology could contact the grocery retailer to deliver more coffee by the time he returns home from work. With such detailed insight, consumers will soon not even have to think about when to purchase. 

      

Disruption: In-store WiFi 

Customer loyalty will be won by retailers who embrace how and when the consumer wants to do business. 68% of today’s connected consumers use a mobile device inside a store. This changes the definition of how a retail store operates and how it must engage with them. In How Retailers are Using Big Data to Deliver Greater Customer Insight, Andy McCue reveals that in the past, retailers not only have not provided WiFi service, but some have even blocked it inside their stores to avoid “showrooming” practices where consumers locate items of interest but then price shop online to purchase at a lower price. But providing free WiFi to customers can actually benefit retailers.

Retailer’s Advantage

Using a mobile app or a mobile-enabled website while inside the store, customers can scan barcodes to order home delivery, read product reviews and broadcast images to friends to ask for their opinions. The most compelling benefit of in-store WiFi is that personal customer data can be collected as shoppers log on inside the store. With this information, retailers can analyze how frequently shoppers visit stores and gather mobile browsing behavior and specific demographics information. McCue mentions that some research even shows that stores who advertise free in-store WiFi can influence consumers to shop there instead.  

Tesco innovation is a virtual store built in a subway in South Korea where commuters can use mobile phones to order goods from a wall of products. 

Disruption: Big Data

Brick-and-mortar retailers who also maintain an ecommerce store have an advantage over online-only retailers. As large retailers begin to bridge data from in-store transactions and online interactions, this combination will give them a significant advantage over digital retail. In his article McCue asserts that big data metrics are necessary to facilitate individualized shopping experiences. Consumers with less time and more technology want instant rewards, and they want to build relationships with brands over multiple channels.     

Retailer’s Advantage

Retailers can analyze this massive deluge of data to precisely target customers, improving operational and promotional efficiencies. They can isolate specific customer segments and use predictive analytics to identify trends such as timing of shopping trips and product preferences. This allows them to personalize shopping and even pair this knowledge with new beacon technology to engage customers early and secure their loyalty, sometimes even before they walk in the door.

Disruption: Beacons & Geofencing 

The combination of location sensing devices and mobile apps opens the door for a whole new generation of personalized customer service and marketing communications. McCue continues his discussion with beacons, wireless sensors that use Bluetooth Low Energy (BLE) technology to communicate with and send data to smartphones within a given distance. Geofencing uses the location data in smartphones so that, for example, when a customer gets within a certain distance of a store, their phone alerts them that they have received an offer for that store.

Retailer’s Advantage

Beacons have many uses, from directing customers to the location of items they are shopping for, to delivering discounts in real-time. Beacons can also be used to make mobile payments, speeding up the checkout process. Beacons collect consumer data as well.

In 2012 a Guatemalan shoe retailer won the Cannes Lion award for a gamification app that used geofencing to poach shoppers from nearby competitors. When a shopper walked into a rival store, the Meat Pack Hijack app would take over the screen with a countdown that started with a 98% discount that dropped by 1% every second that it took the shopper to get to the Meat Pack store. The app automatically froze the countdown as soon as the shopper crossed the store threshold. One shopper received a whopping 89% discount on his shoes when he was able to run to the store in 9 seconds.  

What can you do today that will help you prepare to leverage and manage these impending market disruptions?  

1 – Invest in knowledgeable personnel and empower them to succeed. People are the key to in-store retailing success. In the end, people buy from people. Exemplary customer service by mobile-enabled associates is an edge that online retailers do not have and cannot compete with. An online-only store cannot manage the finite details that human empathy can mitigate, such as making the call to cross the boundary that separates a customer from a higher loyalty level to secure their business.

2 – Get proactive, pull out your hypothetical spatula and flip any fears around negative feedback into a focus on consumer needs. Soon traditional B2B and B2C approaches will become dated in comparison to a more personalized and self-directed Business-to-Individual (B2i) approach. Retailers must look at every customer touchpoint - both in-store and online - as an opportunity to start a relevant, two-way conversation with the customer. Understand howthe purchase process looks from the customer’s perspective. Map out the purchase cycle from the customer’s point of view, and get feedback from the customer to guide you.

3 –  Develop a long-range plan for how you will manage data to personalize the shopping experience. Keep an open mind and subscribe to new ways of thinking that help you to leverage technology to work in your favor. Break your unique vision down into steps and tackle the changes one at a time, over a long period of time, logically and methodically. In his blog post The Future of Retail is the End of Wholesale, retail prophet Doug Stephens describes the future of brick-and-mortar retail as more like a tradeshow floor, the

Retail prophet Doug Stephens writes that in the future, stores will look more like galleries and consumers will use social media provided at the point of purchase to read peer reviews or create their own.

center of an omnichannel experience where consumers can shop brands order virtually from many sources instead of pulling items off of shelves to buy them immediately. Stores will look more like galleries and consumers will use social media provided at the point of purchase to read peer reviews or create their own. Stephens asserts that “the store in essence will become an immersive and experiential advertisement for the products it represents and a direct portal to the entire universe of distribution channels available.”  

Markets are becoming increasingly commoditized as technologies proliferate. For retailers to win the price war, they must learn how to use customer experience as the differentiator. Retailers that refocus on a customer-centric B2i approach by using market disruptors as tools to serve customers will be the ones who create a digital in-store experience that meets expectations and wins customer loyalty.

Rock your store like it’s a trade show? How do you think retail stores will look and operate in the future? What would consumers gain and what would be lost if stores were to turn into showrooms where customer experience becomes the central focus instead of the products?  

@KamiLP Kami Periman is a graduate student at Northwestern University and will earn an M.S. in Integrated Marketing Communications in 2016. She has over 15 years of experience in public relations and promotions, trade show and event management, corporate communications and content development. During her studies she has cultivated a new-found passion for marketing analytics and an interest in enhancing the retail customer experience.  

Retail Marketers: Underestimate the Effects of “Showrooming” and Miss a Significant Opportunity

For marketing professionals, an understanding of the multi-channel shopper is crucial to the way in which consumers are targeted along the path to purchase.  As a graduate student in Northwestern University’s Integrated Marketing Communications (IMC) program specializing in both brand strategy and marketing analytics, I am intrigued by the opportunity that showrooming has presented to retailers and how marketers can incorporate consumer data into their shopper marketing strategies.

In the article “Retailers Are Using Data-Based Approaches to Fight Showrooming, A 'call, click or come over' strategy” (Adweek) Janet Stilson analyzes the effects of technology and the rise of the multi-channel shopper in this opportunistic overview of the retailer battle against showrooming.  Stilson discusses how retailers such as The Home Depot and Anthropologie have embraced multichannel shopping by inviting consumers to shop online and pick-up in-store, or by shipping an item to a consumer’s home for no additional cost.  Stilson also discusses how retailers have begun to use big data to learn more about their customers in-store.  By targeting consumer behavior in-store Stilson argues retailers will be in a better position to connect with the same consumers online.  As such, retailers must embrace multi-channel marketing and ensure a consistent brand experience across all channels.

Image Source: Forbes.com

In the article “'Showrooming' Hits Luxury Fashion, Late to Establish an E-Commerce Presence, Fashion Houses Lose Out as Clients Buy Elsewhere Online” (WSJ) Suzanne Kapner, Manuela Mesco, and Christina Passariello illustrate the effects of showrooming on retailers who have yet to acknowledge this shift in consumer behavior, citing the luxury fashion industry as a specific example.  The luxury fashion industry has been resistant to ecommerce where, they would argue, the brand’s in-store experience cannot be effectively replicated.  The authors point out that retailers with a strong ecommerce offering, such as Barney’s, are proving profitable by engaging with the luxury consumer during this transition.  In an industry where consumers previously used the Internet to research luxury goods before purchasing in-store, luxury fashion brands are having difficulty finding the right formula to bring the brand’s in-store experience online.

After reviewing these articles and drawing on my experiences in the Northwestern IMC program, there are three action items you need to consider addressing the practice of showrooming and its impact on your high value customers.

1)   Keep Brand Essence Consistent.  Maintain a brand presence online that is representative of the brand experience in-store. Understand what it is that drives your consumer in-store and replicate this experience online.

2)   Engage Consumers Across Channels. Consumer shopping habits differ online and in-store.  Customize messaging to communicate differently with your online and in-store customers.  Each channel should offer the consumer a unique experience that corresponds to their different needs.

3)   Facilitate Multi-Channel Shopping. Determine the method of delivery most appropriate for your customer.  Consumers may prefer to have the product shipped from the store to their home or to reserve their items online and have them waiting in-store.

Today, your markets are moving online.  You need to align your brand image, brand essence, and company with the changing habits of the consumer.  Brands that maintain presence both in the physical world and online will be better positioned to adapt alongside the changing habits of the consumer.

Catherine Maki is a Master of Science candidate in Integrated Marketing Communications at Medill Northwestern University specializing in Brand Strategy and Marketing Analytics.  Prior to the program she worked in Media Planning in Toronto, Canada.  Catherine has a passion for uncovering insights from quantitative and qualitative data, and translating data into strategic brand stories. Continue the conversation via Twitter at @CatherineMaki or LinkedIn.